Shenzhen is set to offer offshore local government bonds of up to RMB5 billion in Hong Kong over the rest of the year, according to an official statement.
The announcement includes detailed arrangements for the dissemination of the bonds, which primarily involves seeking eligible underwriters, lawyers, and financial agents.
As per the statement seen by newsgd.com, underwriters will engage in the offering process wholly, from drawing up plans to finalizing the offers.
Several qualifications are to be met for eligible candidates: legal international financial institutions that own branches in China, which qualify for bond offering in Hong Kong; a wealth of foreign underwriting experience, and underwriting precedents in China after 2019; and professional competence and advantages as well as a willingness to coordinate.
Liu Guohong, director of the Finance and Modern Industry Department in the China Development Institute, believes the rationale behind the offer is that lower offshore interest rates can help relieve debt repayment pressures for local governments.
More importantly, diverse overseas tenders are expected to boost the RMB’s international popularity, encouraging greater use of the currency in trade and easing exchange rate controls.
Other professionals also mentioned that offshore offers are injecting greater liquidity and lowering risk for the local debt market, and can reflect regional differences in repayment capacity and credit rating. MDT
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